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EXHIBIT 10.1
GRANITE CONSTRUCTION
EMPLOYEE STOCK OWNERSHIP PLAN
As Amended and Restated as of January 1, 1998
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TABLE OF CONTENTS
Section Page
1. Nature of the Plan .................................................... 1
2. Definitions ........................................................... 2
3. Eligibility and Participation ......................................... 8
4. Employer Contributions ................................................ 10
5. Investment of Trust Assets ............................................ 12
6. Allocations to Participants' Accounts ................................. 14
7. Allocation Limitations ................................................ 18
8. Voting or Tender of Stock ............................................. 21
9. Disclosure to Participants ............................................ 23
10. Vesting and Forfeitures ............................................... 24
11. Years of Vesting Service and Break in Service ......................... 25
12. When Capital Accumulation Will Be Distributed ......................... 27
13. In-Service Distributions .............................................. 29
14. How Capital Accumulation Will Be Distributed .......................... 32
15. No Assignment of Benefits ............................................. 35
16. Administration ........................................................ 35
17. Claims Procedure ...................................................... 39
18. Limitation on Participants' Rights .................................... 40
19. Future of the Plan .................................................... 41
20. "Top-Heavy" Contingency Provisions .................................... 42
21. Governing Law ......................................................... 44
22. Execution ............................................................. 44
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GRANITE CONSTRUCTION
EMPLOYEE STOCK OWNERSHIP PLAN
As Amended and Restated as of January 1, 1998
Section 1. Nature of the Plan.
The purpose of this Plan is to enable participating Employees to
share in the growth and prosperity of Granite Construction Incorporated (the
"Company") and to provide Participants with an opportunity to accumulate capital
for their future economic security. The Plan is intended to do this without any
deductions from Participants' paychecks and without requiring them to invest
their personal savings. The primary purpose of the Plan is to enable
Participants to acquire stock ownership interests in the Company. Therefore, the
Trust established under the Plan is designed to invest primarily in Stock.
The Plan is also designed to be available as a technique of
corporate finance to the Company. Accordingly, it may be used to accomplish the
following objectives:
(a) To meet general financing requirements of the Company, including
capital growth and transfers in the ownership of Stock;
(b) To provide Participants with beneficial ownership of Stock,
substantially in proportion to their relative Compensation,
without requiring any cash outlay, any reduction in pay or other
personal investment on the part of Participants; and
(c) To receive loans (or other extensions of credit) to finance the
acquisition of Stock, with such loans to be repaid by Employer
Contributions to the Trust and dividends received on such Stock.
The Plan (originally adopted as the Granite Construction Company
Employee Stock Ownership Plan effective as of January 1, 1984, and subsequently
amended and restated
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effective as of January 1, 1987, and April 20, 1990) is hereby amended and
restated as of January 1, 1998. The Plan is a stock bonus plan under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and an
employee stock ownership plan under Section 4975(e)(7) of the Code. To satisfy
applicable requirements of the Code, as amended by the Small Business Job
Protection Act of 1996, the fourth sentence of Section 3(c) is amended effective
as of December 12, 1994, and the definitions of "Compensation" and "Highly
Compensated Employee" in Section 2 and the second and third sentences of Section
12(c) are amended effective as of January 1, 1997.
All Trust Assets held under the Plan will be administered,
distributed, forfeited and otherwise governed by the provisions of this Plan and
the related Trust Agreement. The Plan is administered by an Administrative
Committee for the exclusive benefit of Participants (and their Beneficiaries).
Section 2. Definitions.
In this Plan, whenever the context so indicates, the singular or
plural number and the masculine, feminine or neuter gender shall be deemed to
include the other, the terms "he," "his" and "him" shall refer to a Participant,
and the capitalized terms shall have the following meanings:
Account ........................ One of two accounts maintained to record the interest
of a Participant under the Plan. See Section 6.
Affiliate ...................... Any corporation which is a member of a controlled
group of corporations (within the meaning of
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Section 414(b) of the Code) of which the
Company is also a member or any trade or
business (whether or not incorporated) which is
under common control with the Company (within
the meaning of Section 414(c) of the Code).
Allocation Date ................ December 31st of each year (the last day of the Plan
Year).
Beneficiary .................... The person (or persons) entitled to receive any benefit
under the Plan in the event of a Participant's death.
See Section 14(b).
Board of Directors ............. The Board of Directors of the Company.
Break in Service ............... A Plan Year in which an Employee is not credited
with more than 500 Hours of Service as a result of his
termination of Service. See Section 11(b).
Capital Accumulation ........... A Participant's vested, nonforfeitable interest in his
Accounts under the Plan. Each Participant's Capital
Accumulation shall be determined in accordance with
the provisions of Section 10 and distributed as
provided in Sections 12, 13 and 14.
Code ........................... The Internal Revenue Code of 1986, as amended.
Committee ...................... The Administrative Committee appointed by the
Board of Directors to administer the Plan. See
Section 16.
Company ........................ Granite Construction Incorporated, a Delaware
corporation.
Compensation ................... For Plan Years beginning after December 31, 1997,
the Statutory Compensation paid to an Employee by
his Employer, but excluding (1) reimbursements or
other expense allowances (including travel expense
allowances), (2) fringe benefits (cash and noncash),
(3) moving expenses, (4) welfare benefits, (5) any
amount in excess of $160,000 (as adjusted
periodically after 1998 for increases in the cost of
living pursuant to
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Section 401(a)(17) of the Code) and
(6) any amount paid to an Employee pursuant to the
terms of a collective bargaining agreement.
For the Plan Year ending December 31, 1997,
only, Statutory Compensation shall include the
amount of an Employee's 401(k) Contributions
under the Profit Sharing Plan and any amounts
that are contributed by an Employer on his
behalf that are not included in gross income
under Section 125 of the Code.
Disability ....................... Any mental or physical incapacity of an Employee
that, in the opinion of a licensed physician selected by
the Company, renders the Employee totally and
permanently incapable of performing his assigned
duties with an Employer and results in his termination
of Service.
Employee ......................... Any individual who is treated by an Employer as a
common-law employee. A leased employee, as
described in Section 414(n) of the Code, is not an
Employee for purposes of this Plan.
Employer ......................... The Company and each Affiliate which is designated
as an Employer by the Board of Directors and which
adopts the Plan for the benefit of its Employees.
Employer Contributions ........... Payments made to the Trust by an Employer. See
Section 4.
ERISA ............................ The Employee Retirement Income Security Act of
1974, as amended.
Fair Market Value ................ The fair market value of Stock, as determined by the
Committee for all purposes under the Plan based upon
prices quoted on the New York Stock Exchange.
Financed Shares .................. Shares of Stock acquired by the Trust with the
proceeds of a Loan.
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Forfeiture ....................... The portion of a Participant's Accounts which does
not become a part of his Capital Accumulation and
which is forfeited under Section 10(b).
Highly Compensated
Employee ......................... An Employee who (1) was a "5% owner" at any time
during the Plan Year or preceding Plan Year, or (2)
received Statutory Compensation in excess of $80,000
in the preceding Plan Year and was a member of the
top-paid 20% group of Employees for such preceding
Plan Year. The $80,000 amount shall be adjusted
after 1997 for increases in the cost of living pursuant
to Section 414(q)(1) of the Code.
Hour of Service .................. Each hour of Service for which an Employee is
credited under the Plan, as described in Section 3(d).
Loan ............................. A loan (or other extension of credit) used by the Trust
to finance the acquisition of Stock, which loan may
constitute an extension of credit to the Trust from a
party in interest (as defined in ERISA). See Section
5(b).
Nonstock Account ................. The Account which reflects each Participant's interest
under the Plan attributable to Trust Assets other than
Stock. See Section 6.
Participant ...................... Any Employee or former Employee who has met the
applicable eligibility requirements of Section 3 and
who has not yet received a complete distribution of
his Capital Accumulation.
Plan ............................. The Granite Construction Employee Stock Ownership
Plan, which includes this Plan and the Trust
Agreement.
Plan Year ........................ The 12-month period ending on each Allocation Date
(and coinciding with each calendar year, which is the
taxable year of the Company).
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Profit Sharing Plan .............. The Granite Construction Company Profit Sharing
and 401(k) Plan, a profit sharing plan under Section
401(a) of the Code that includes a "cash or deferred
arrangement" under Section 401(k) of the Code.
Retirement ....................... Termination of Service on or after attaining age 55 or,
if later, the completion of ten Years of Vesting
Service (but not later than the date he attains age 65
or, if later, the fifth anniversary of the date he became
a Participant).
Service .......................... Employment with the Company and or any Affiliate.
For any corporation or other business entity which is
designated as an Employer whose Employees are
eligible to participate in the Plan and for the
employees of any other business substantially all the
assets of which are acquired by an Employer, the
Board of Directors may grant the Employees of such
entity credit for their years of service with such entity
(prior to the date that such entity became an Affiliate)
for purposes of eligibility and vesting under the Plan.
Such grant shall be evidenced by action of the Board
of Directors and attached to and made a part of this
Plan.
Statutory Compensation ........... For Plan Years beginning after December 31, 1997,
the total remuneration paid to an Employee by an
Employer during the Plan Year for personal services
rendered, plus the amount of his 401(k) Contributions
under the Profit Sharing Plan and any amounts that
are contributed by an Employer on his behalf that are
not included in gross income under Section 125 of the
Code, but excluding employer contributions to a plan
of deferred compensation, amounts realized in
connection with stock options and amounts which
receive special tax benefits.
For the Plan Year ending December 31, 1997,
only, Statutory Compensation shall not include
the amount of an Employee's 401(k) Contributions
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under the Profit Sharing Plan and any amounts
that are contributed by an Employer on his
behalf that are not included in gross income
under Section 125 of the Code (except for
purposes of determining whether an Employee is a
Highly Compensated Employee for such Plan Year).
Stock ............................. Shares of common stock issued by the Company.
Stock Account ..................... The Account which reflects each Participant's interest
in Stock held under the Plan. See Section 6.
Trust ............................. The Granite Construction Employee Stock Ownership
Trust, created by the Trust Agreement entered into
between the Company and the Trustee.
Trust Agreement ................... The Agreement between the Company and the Trustee
establishing the Trust and specifying the duties of the
Trustee.
Trust Assets ...................... The Stock (and other assets) held in the Trust for the
benefit of Participants. See Section 5.
Trustee ........................... The Trustee (and any successor Trustee) appointed by
the Board of Directors to hold the Trust Assets.
Valuation Date .................... The Allocation Date of each Plan Year or the last day
of such interim period as the Committee, in its
discretion, may prescribe.
Year of Vesting Service ........... Each Plan Year in which an Employee is credited with
at least 1000 Hours of Service. See Section 11(a).
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Section 3. Eligibility and Participation.
(a) Each Employee who was a Participant on December 31, 1997, shall
continue as a Participant. Each other Employee shall become a Participant as of
Allocation Date of the Plan Year in which his Service began if he is credited
with at least 1000 Hours of Service during that Plan Year and is still an
Employee on the Allocation Date; provided, however, that an Employee who incurs
a Disability during that Plan Year while an Employee shall become a Participant
on the date of Disability and an Employee who dies during that Plan Year while
an Employee shall become a Participant on the day prior to his date of death.
Each other Employee who does not become a Participant pursuant to the preceding
sentence shall become a Participant as of the June 30th or December 31st
coinciding with or next following the date on which he is credited with at least
1000 Hours of Service over a period that does not exceed 12 consecutive months,
provided that he is still an Employee on such June 30th or December 31st. For
this purpose, the eligibility computation period for determining the 1,000 Hours
of Service requirement in the preceding sentence shall initially be the period
of 12 consecutive months beginning on the Employee's initial date of Service and
thereafter shall be the period of 12 consecutive months beginning on the
anniversary date of the Employee's initial date of Service.
Employees whose terms of employment are covered by a collective
bargaining agreement shall not be eligible to participate in the Plan unless the
collective bargaining agreement specifically provides for such Employees to
participate in the Plan. Employees who are nonresident aliens who receive no
earned income from the Company or an Affiliate that constitutes income from
sources within the United States shall not be eligible to participate in the
Plan. An Employee who ceases to be ineligible to participate in the Plan shall
become a
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Participant as of the later of the date he ceases to be ineligible or
the date described in the preceding paragraph.
(b) A Participant is entitled to share in the allocation of Employer
Contributions and Forfeitures under Section 6(a) for each Plan Year in which he
is credited with at least 1000 Hours of Service and in which he is an Employee
on the Allocation Date. A Participant is also entitled to share in the
allocation of Employer Contributions and Forfeitures for the Plan Year of his
Retirement, Disability or death.
(c) A former Participant who is reemployed by an Employer shall
become a Participant as of the date of his reemployment. A former Employee who
is reemployed by an Employer and who previously satisfied the service
requirement described in Section 3(a) shall become a Participant as of the later
of the date of his reemployment or the date described in Section 3(a).
Notwithstanding any provision of the Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Section 414(u) of the Code.
(d) Hours of Service - For purposes of determining the Hours of
Service to be credited to an Employee under the Plan, the following rules shall
be applied:
(1) Hours of Service shall include each hour of
Service for which an Employee is paid (or
entitled to payment) for the performance of
duties; each hour of Service for which an
Employee is paid (or entitled to payment)
for a period during which no duties are
performed (irrespective of whether Service
has terminated) due to vacation, holiday,
illness, incapacity (including Disability),
layoff, jury duty, military duty or paid
leave of absence; and each additional hour
of Service for which back pay is either
awarded or agreed to (irrespective of
mitigation of damages); provided, however,
that not more than 501 Hours of Service
shall be credited for a single continuous
period during which an Employee does
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not perform any duties (whether or not such
period occurs in a single Plan Year or 12 month
period, with respect to an Employee's initial
eligibility computation period).
(2) The crediting of Hours of Service shall be
determined in accordance with the rules set
forth in paragraphs (b) and (c) of Section
2530.200b-2 of the regulations prescribed by
the Department of Labor, which rules shall
be consistently applied with respect to all
Employees within the same job
classification.
(3) Hours of Service shall not be credited to an
Employee for a period during which no duties
are performed if payment is made or due
under a plan maintained solely for the
purpose of complying with applicable
worker's compensation, unemployment
compensation or disability insurance laws,
and Hours of Service shall not be credited
on account of any payment made or due an
Employee solely in reimbursement of medical
or medically-related expenses.
(4) Hours of Service that are credited for the
performance of duties shall be determined
from records maintained by the Employer;
provided, however, that, in the case of an
Employee whose Compensation is not
determined on the basis of certain amounts
for each hour worked and whose hours are not
required to be counted and recorded by any
Federal law (such as the Fair Labor
Standards Act), such Employee's Hours of
Service need not be determined from
employment records, and such Employee shall
be credited with ten Hours of Service for
each day in which he would be credited with
any Hours of Service. Hours of Service that
are credited for periods during which no
duties are performed or for back pay shall
be credited on the basis of 40 Hours of
Service for each week or eight Hours of
Service for each day.
Section 4. Employer Contributions.
(a) Employer Contributions shall be paid to the Trustee for each
Plan Year in such amounts (or under such formula) as may be determined by the
Board of Directors; provided, however, that the amount of Employer Contributions
must be at least sufficient to enable the Plan to make payments of principal
and/or interest on an outstanding Loan and that Employer
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Contributions shall not be made for any Plan Year in amounts which can be
allocated to no Participant's Accounts by reason of the allocation limitation
described in Section 7(a) or in amounts which are not deductible under Section
404(a) of the Code.
(b) Employer Contributions for each Plan Year shall be paid to the
Trustee not later than the due date (including extensions) for filing the
Company's Federal income tax return for that Plan Year. Employer Contributions
may be paid in cash and/or in shares of Stock, as determined by the Board of
Directors; provided, however, that the Board of Directors may determine that
Employer Contributions may be paid as provided in Section 5(c) with notice to
the Committee and the Trustee. The amount of any Employer Contributions that are
paid in the form of shares of Stock shall be based upon Fair Market Value as of
the date such shares are issued to the Trust.
(c) Any Employer Contributions which are not deductible under
Section 404(a) of the Code may be returned to the Employer by the Trustee (upon
the direction of the Company) within one year after the deduction is disallowed
or after it is determined that the deduction is not available. In the event that
Employer Contributions are paid to the Trust by reason of a mistake of fact,
such Employer Contributions may be returned to the Employer by the Trustee (upon
the direction of the Company) within one year after the payment to the Trust.
(d) No Participant shall be required or permitted to make
contributions to the Trust.
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Section 5. Investment of Trust Assets.
(a) In General - Trust Assets will be invested by the Trustee
primarily (or exclusively) in Stock in accordance with directions from the
Committee. Employer Contributions (and other Trust Assets) may be used to
acquire shares of Stock through open-market purchases, from any Company
shareholder in a privately-negotiated transaction or from the Company. The
Trustee may also invest Trust Assets in such other prudent investments as the
Committee deems to be desirable for the Trust, or Trust Assets may be held
temporarily in cash. All purchases of Stock by the Trustee shall be made only as
directed by the Committee and all purchases from a party in interest (as defined
in ERISA) shall be made only at prices which do not exceed Fair Market Value.
The Committee may direct the Trustee to invest and hold up to 100% of the Trust
Assets in Stock.
(b) Loans - With the approval of the Board of Directors, the
Committee may direct the Trustee to incur Loans from time to time to finance the
acquisition of Stock (Financed Shares) or to repay a prior Loan. An installment
obligation incurred in connection with the purchase of Stock shall be treated as
a Loan, and all indebtedness incurred in connection with a single acquisition of
Stock shall be treated as one Loan. A Loan shall be for a specific term, shall
bear a reasonable rate of interest and shall not be payable on demand except in
the event of default. A Loan may be secured by a pledge of the Financed Shares
so acquired (or acquired with the proceeds of a prior Loan which is being
refinanced). No other Trust Assets may be pledged as collateral for a Loan, and
no lender shall have recourse against Trust Assets except for Financed Shares
remaining pledged to the lender. Any pledge of Financed Shares must provide for
the release of the shares so pledged as payments on the Loan are made by the
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Trustee and such Financed Shares are allocated to Participants' Stock Accounts
under Section 6(b). If the lender is a party in interest (as defined in ERISA),
any pledge of Financed Shares must provide for a transfer of Trust Assets to the
lender on default only upon and to the extent of the failure of the Trust to
meet the payment schedule of the Loan.
(c) Loan Payments - Payments of principal and/or interest on any Loan
shall be made by the Trustee (as directed by the Committee) only from Employer
Contributions paid in cash to enable the Trust to repay such Loan, from earnings
attributable to such Employer Contributions and from any cash dividends received
by the Trust on the Financed Shares (whether allocated or unallocated) purchased
with the proceeds of such Loan; and the payments made with respect to a Loan for
a Plan Year must not exceed the sum of such Employer Contributions, earnings and
dividends for that Plan Year (and prior Plan Years), less the amount of such
payments for prior Plan Years. If the Company is the lender with respect to a
Loan, Employer Contributions may be paid in the form of cancellation of
indebtedness under the Loan. If the Company is not the lender with respect to a
Loan, the Company may elect to make payments on the Loan directly to the lender
and to treat such payments as Employer Contributions.
(d) Sales of Stock - Subject to the approval of the Board of Directors
or except as otherwise provided in Section 8(b), the Committee may direct the
Trustee to sell shares of Stock to any person (including the Company), provided
that any such sale must be made at a price not less favorable to the Plan than
Fair Market Value as of the date of the sale and may be made only in compliance
with Federal and state securities laws. Notwithstanding the provisions of
Section 5(c), the Committee may direct the Trustee to apply the proceeds from
the sale of
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unallocated Financed Shares (in the Loan Suspense Account described in Section
6(b)) to repay the Loan (incurred to finance the purchase of such Financed
Shares) in the event of the merger, consolidation or sale of all or
substantially all of the assets of the Company or sale of all or substantially
all of the Stock of the Company or the termination of the Plan or if the Plan
ceases to be an employee stock ownership plan under Section 4975(e)(7) of the
Code. Any decision by the Committee to direct the Trustee to sell Stock under
this Section 5(d) must comply with the fiduciary duties applicable Section
404(a)(1) of ERISA and with the primary benefit rule of Section 408(b)(3)(A) of
EPISA and Section 4975(d)(3)(A) of the Code, if applicable.
Section 6. Allocations to Participants' Accounts.
A Stock Account and a Nonstock Account shall be maintained to
reflect the interest of each Participant under the Plan.
Stock Account - The Stock Account maintained for each Participant
will be credited annually with his allocable share of Stock (including
fractional shares) purchased and paid for by the Trust or contributed in kind to
the Trust as an Employer Contribution, with any Forfeitures of Stock and with
any stock dividends on Stock allocated to his Stock Account.
Nonstock Account - The Nonstock Account maintained for each
Participant will be credited annually with his allocable share of Employer
Contributions that are not in the form of Stock, with any Forfeitures from
Nonstock Accounts, with any cash dividends on Stock allocated to his Stock
Account (other than currently distributed dividends) and any net income (or
loss) of the Trust. Such Account will be debited for the Participant's share of
any cash
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payments made by the Trustee for the acquisition of Stock or for the
payment of any principal and/or interest on a Loan.
The allocations to Participants' Accounts for each Plan Year will be
made as follows:
(a) Employer Contributions and Forfeitures - Employer Contributions
under Section 4(a) and Forfeitures under Section 10(b) for each Plan Year shall
be allocated as of the Allocation Date among the Accounts of Participants so
entitled under Section 3(b) in the ratio that the Compensation of each such
Participant bears to the total Compensation of all such Participants, subject to
the allocation limitations described in Section 7.
(b) Financed Shares - Any Financed Shares acquired by the Trust
shall initially be credited to a "Loan Suspense Account" and will be allocated
to the Stock Accounts of Participants only as payments on the Loan are made by
the Trustee. The number of Financed Shares to be released from the Loan Suspense
Account for allocation to Participants' Stock Accounts for each Plan Year shall
be determined by the Committee (as of each Allocation Date) as follows:
(1) Principal/Interest Method - The number of Financed
Shares held in the Loan Suspense Account immediately before the release for the
current Plan Year shall be multiplied by a fraction. The numerator of the
fraction shall be the amount of principal and/or interest paid on the Loan for
that Plan Year. The denominator of the fraction shall be the sum of the
numerator plus the total payments of principal and interest on that Loan
projected to be paid for all future Plan Years. For this purpose, the interest
to be paid in future years is to be computed by using the interest rate in
effect as of the current Allocation Date.
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(2) Principal Only Method - The Committee may elect (as
to each Loan) or the provisions of the Loan may provide for the release of
Financed Shares from the Loan Suspense Account based solely on the ratio that
the payments of principal for each Plan Year bear to the total principal amount
of the Loan. This method may be used only to the extent that: (A) the Loan
provides for annual payments of principal and interest at a cumulative rate that
is not less rapid at any time than level annual payments of such amounts for ten
years; (B) interest included in any payment on the Loan is disregarded only to
the extent that it would be determined to be interest under standard loan
amortization tables; and (C) the entire duration of the Loan repayment period
does not exceed ten years, even in the event of a renewal, extension or
refinancing of the Loan.
In each Plan Year in which Trust Assets are applied to make payments
on a Loan, the Financed Shares released from the Loan Suspense Account in
accordance with the provisions of this Section 6(b) shall be allocated among the
Stock Accounts of Participants in the manner determined by the Committee based
upon the source of funds (Employer Contributions, earnings attributable to such
Employer Contributions and cash dividends on Financed Shares allocated to
Participants' Stock Accounts or cash dividends on Financed Shares credited to
the Loan Suspense Account) used to make the payments on the Loan. If cash
dividends on Financed Shares allocated to a Participant's Stock Account are used
for payments on a Loan, Financed Shares (representing that portion of such
payments and whose Fair Market Value is at least equal to the amount of such
dividends) released from the Loan Suspense Account shall be allocated to that
Participant's Stock Account.
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(c) Net Income (or Loss) of the Trust - The net income (or loss) of the
Trust for each Plan Year will be determined as of the Valuation Date. Prior to
the allocation of Employer Contributions and Forfeitures for the Plan Year, each
Participant's share of any net income (or loss) will be allocated to his
Nonstock Account in the ratio that the balance of his Nonstock Account on the
preceding Valuation Date (reduced by any distribution of Capital Accumulation
from such Account since the preceding Valuation Date) bears to the sum of such
Account balances for all Participants as of that date. The net income (or loss)
of the Trust includes the increase (or decrease) in the fair market value of
Trust Assets (other than Stock), interest income, dividends and other income and
gains (or losses) attributable to Trust Assets (other than any dividends on
allocated Stock) since the preceding Valuation Date, reduced by any expenses
charged to the Trust Assets since the preceding Valuation Date. The
determination of the net income (or loss) of the Trust shall not take into
account any interest paid by the Trust under a Loan.
(d) Dividends on Stock - Any cash dividends received on shares of Stock
allocated to Participants' Stock Accounts will be allocated to the respective
Nonstock Accounts of such Participants. Any cash dividends received on
unallocated shares of Stock (including any Financed Shares credited to the Loan
Suspense Account) shall be included in the computation of the net income (or
loss) of the Trust. Any stock dividends received on Stock shall be credited to
the Accounts (including the Loan Suspense Account) to which such Stock was
allocated. Any cash dividends which are currently distributed to Participants
(or their Beneficiaries) under Section 13(a) shall not be credited to their
Nonstock Accounts.
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(e) Accounting for Allocations - The Committee shall establish
accounting procedures for the purpose of making the allocations to Participants'
Accounts provided for in this Section 6. The Committee shall maintain adequate
records of the aggregate cost basis of Stock allocated to each Participant's
Stock Account. The Committee shall also keep separate records of Financed Shares
acquired with the proceeds of each Loan and of Employer Contributions (and any
earnings thereon) made for the purpose of enabling the Trust to repay any Loan.
From time to time, the Committee may modify the accounting procedures for the
purposes of achieving equitable and nondiscriminatory allocations among the
Accounts of Participants in accordance with the general concepts of the Plan,
the provisions of this Section 6 and the requirements of the Code and ERISA.
Section 7. Allocation Limitations.
(a) Limitation on Annual Additions - The Annual Additions for each
Plan Year with respect to any Participant may not exceed the lesser of:
(1) 25% of his Statutory Compensation; or
(2) $30,000, as may be adjusted for increases in
the cost of living pursuant to Section
4l5(d)(l)(C) of the Code.
For this purpose, "Annual Additions" shall be the total of the Employer
Contributions and Forfeitures (including any income attributable to Forfeitures)
allocated to the Accounts of a Participant for the Plan Year, excluding any
Employer Contributions which are used by the Trust (not later than the due date,
including extensions, for filing the Company's Federal income
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tax return for that Plan Year) to pay interest on a Loan and any Financed Shares
which are allocated as Forfeitures, plus any employer contributions (including
401(k) contributions) and forfeitures allocated to him under the Profit Sharing
Plan for the Plan Year. In determining such Annual Additions, Forfeitures of
Stock shall be included at the Fair Market Value as of the Allocation Date and
Employer Contributions in the form of Stock shall be included at the Fair Market
Value as of the date such shares are issued to the Trust.
If the aggregate amount that would be allocated to the accounts of a
Participant under this Plan and the Profit Sharing Plan in the absence of this
limitation would exceed the amount set forth in this limitation, then, to the
extent necessary, the Participant's Annual Additions for the Plan Year shall be
reduced and reallocated to the Accounts of Participants not affected by this
limitation for the Plan Year in the following order: (1) any profit sharing
contributions under the Profit Sharing Plan made on the Participant's behalf for
the Plan Year shall be reduced, (2) any "additional 401(k) contributions" made
on a Participant's behalf for the Plan Year under the Profit Sharing Plan shall
be returned to the Participant as Compensation (together with any income
attributable thereto), (3) any 401(k) contributions (other than "additional
401(k) contributions") under the Profit Sharing Plan made on the Participant's
behalf for the Plan Year shall be returned to the Participant as Compensation
(together with any income attributable thereto), (4) any matching contributions
under the Profit Sharing Plan made on the Participant's behalf for the Plan Year
shall be reduced and (5) any Employer Contributions under this Plan made on the
Participant's behalf for the Plan Year shall be reduced.
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If, after such reductions, there are any Forfeitures which can be
allocated to no Participant's Accounts by reason of this limitation, such
Forfeitures shall be credited to a "Forfeiture Suspense Account" and allocated
as Forfeitures under Section 6(a) for the next succeeding Plan Year (prior to
the allocation of Employer Contributions for such succeeding Plan Year).
(b) Limitations on Highly Compensated Employees - Not more than
one-third of the Employer Contributions for the Plan Year applied to pay
principal and/or interest on a Loan may be allocated to Participants who are
Highly Compensated Employees. The Committee shall reallocate Employer
Contributions to the extent necessary to satisfy this special rule. The Annual
Additions under Section 7(a) with respect to Financed Shares released from the
Loan Suspense Account (by reason of Employer Contributions used for payments on
a Loan) and allocated to Participants' Stock Accounts shall be based upon the
lesser of (A) the amount of such Employer Contributions (as determined after
application of the preceding sentence); or (B) the Fair Market Value of such
allocated Financed Shares as of the Allocation Date. Annual Additions shall not
include any allocation attributable to proceeds from the sale of Financed Shares
by the Trust or to appreciation (realized or unrealized) in the Fair Market
Value of Stock.
(c) Limitation on Electing Shareholder - If a shareholder of Granite
Construction Company sold stock of Granite Construction Company to the Trust on
or before October 22, 1986, and elected nonrecognition of gain under Section
1042 of the Code, no portion of the stock purchased in any such transaction (or
any dividends or other income attributable thereto) may be allocated to the
Accounts of:
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(1) any Participant who has made an election
under Section 1042 of the Code;
(2) any Participant who is such selling
shareholder's spouse, brother or sister
(whether by the whole or half blood),
ancestor or lineal descendant (except as to
certain lineal descendants, to the extent
provided in Section 409(n)(3)(A) of the Code),
or any other person who bears a relationship to
such selling shareholder that is described in
Section 267(b) of the Code; or
(3) any Participant owning (as determined under
Section 318(a) of the Code)
more than 25% in value of such stock.
To the extent that a Participant is subject to the allocation
limitation described in this Section 7(c) for a Plan Year, he shall not share in
the allocation of Employer Contributions and Forfeitures.
Section 8. Voting or Tender of Stock.
(a) Voting Stock - All shares of Stock held by the Trust shall be
voted by the Trustee only in accordance with the provisions of this Section
8(a). Each Participant (or Beneficiary) will be entitled to direct the Trustee
as to the manner in which shares of Stock then allocated to his Stock Account
will be voted. Each Participant (or Beneficiary) will also be entitled to
separately direct the Trustee as to the manner in which a portion of the shares
of Stock not then allocated to Participants' Stock Accounts will be voted. The
portion of the unallocated shares of Stock with respect to which a Participant
(or Beneficiary) may give voting instructions to the Trustee shall be the total
number of unallocated shares of Stock held by the Trust multiplied by a
fraction, the numerator of which is the number of shares of Stock then allocated
to his Stock Account and the denominator of which is the total number of shares
allocated to Participants'
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Stock Accounts. Each Participant (or Beneficiary) who is entitled to direct the
Trustee as to the manner in which shares of Stock will be voted shall be
provided with the proxy statement and other materials provided to Company
shareholders in connection with each shareholder meeting, together with a form
or forms upon which the Participant (or Beneficiary) shall have the right to
give confidential voting instructions to the Trustee separately for the
allocated and the unallocated shares. A Participant (or Beneficiary) who does
not give instructions to the Trustee shall be treated as having authorized the
Committee to direct the Trustee as to the voting of his shares.
(b) Tender Offer - In the event that there should be a tender or
exchange offer for Stock, the response to such offer by the Trustee shall be
only in accordance with the provisions of this Section 8(b). Each Participant
(or Beneficiary) will be entitled to direct the Trustee as to the manner in
which to respond to such offer with respect to shares of Stock then allocated to
his Stock Account. Each Participant (or Beneficiary) will also be entitled to
separately direct the Trustee as to the manner in which to respond to such offer
with respect to a portion of the shares of Stock not then allocated to
Participants' Stock Accounts. The portion of the unallocated shares of Stock
with respect to which a Participant (or Beneficiary) may give instructions to
the Trustee shall be the total number of unallocated shares of Stock held by the
Trust multiplied by a fraction, the numerator of which is the number of shares
of Stock then allocated to his Stock Account and the denominator of which is the
total number of shares allocated to Participants' Stock Accounts. Each
Participant (or Beneficiary) who is entitled to direct the Trustee as to the
manner in which the Trustee will respond to any such offer shall be provided
with the tender offer materials and the Participant (or Beneficiary) shall have
the right
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to provide confidential instructions to the Trustee as to the manner
in which to respond to such offer with respect to the shares of Stock then
allocated to his Stock Account and separately with respect to a portion of the
shares of Stock not then allocated to Participants' Stock Accounts. A
Participant (or Beneficiary) who does not give instructions to the Trustee shall
be treated as having directed the Trustee not to tender.
(c) Participant as Named Fiduciary - Each Participant (or
Beneficiary) shall be a named fiduciary of the Plan for the purpose of providing
directions as to the voting of the shares of Stock allocated to his Stock
Account and a portion of the shares of Stock not then allocated to Participants'
Stock Accounts pursuant to Section 8(a) and as to the tendering of such shares
of Stock pursuant to Section 8(b).
Section 9. Disclosure to Participants.
(a) Summary Plan Description - Each Participant shall be furnished
with the summary plan description of the Plan required by Sections 102(a)(l) and
104(b)(l) of ERISA. Such summary plan description shall be updated from time to
time as required under ERISA and Department of Labor regulations thereunder.
(b) Summary Annual Report - Within two months after the due date for
filing the annual return/report (Form 5500) for the Plan with the Internal
Revenue Service, each Participant shall be furnished with the summary annual
report of the Plan required by Section 104(b)(3) of ERISA, in the form
prescribed in regulations of the U. S. Department of Labor.
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(c) Annual Statement - Following each Allocation Date, each
Participant shall be furnished with a statement reflecting the following
information:
(1) The balances (if any) in his Accounts as of
the beginning of the Plan Year.
(2) The amount of Employer Contributions and
Forfeitures allocated to his Accounts for
that Plan Year.
(3) The adjustments to his Accounts to reflect
his share of dividends (if any) on Stock and
any net income (or loss) of the Trust for
that Plan Year.
(4) The new balances in his Accounts, including
the number of shares of Stock allocated to
his Stock Account and the Fair Market Value
as of that Allocation Date.
(5) His number of Years of Vesting Service and
his vested percentage in his Account
balances (under Sections 10 and 11) as of
that Allocation Date.
(d) Additional Disclosure - The Company shall make available for
examination by any Participant copies of the Plan, the Trust Agreement and the
latest annual report of the Plan filed (on Form 5500) with the Internal Revenue
Service. Upon written request of any Participant, the Company shall furnish
copies of such documents and may make a reasonable charge to cover the cost of
furnishing such copies, as provided in regulations of the U. S. Department of
Labor.
Section 10. Vesting and Forfeitures.
(a) Vesting - A Participant's interest in his Accounts shall become
100% vested and nonforfeitable without regard to his Years of Vesting Service if
he (A) is eligible for Retirement
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(whether or not he actually terminates Service), (B) terminates Service by
reason of Disability, (C) dies while employed by the Company or an Affiliate, or
(0) completes five Years of Vesting Service.
(b) Forfeitures - Any portion of the final balances in a
Participant's Accounts which is not vested (and does not become part of his
Capital Accumulation) will become a Forfeiture as of the Allocation Date of the
Plan Year in which he incurs a five-consecutive-year Break in Service (or in
which he dies, if earlier). Forfeitures shall first be charged against a
Participant's Nonstock Account, with any balance charged against his Stock
Account (at Fair Market Value). Financed Shares shall be forfeited only after
other shares of Stock have been forfeited. All Forfeitures will be reallocated
to the Accounts of remaining Participants, as provided in Section 6(a), as of
the Allocation Date of the Plan Year in which a five-consecutive-year Break in
Service occurs (or in which the Participant dies, if earlier).
Section 11. Years of Vesting Service and Break in Service.
(a) Years of Vesting Service - An Employee's Years of Vesting
Service shall be the number of Plan Years in which he is credited with at least
1000 Hours of Service. Years of Vesting Service shall include such Service with
the Company or any Affiliate.
(b) Break in Service - A one-year Break in Service shall occur in a
Plan Year in which an Employee is not credited with more than 500 Hours of
Service as a result of his termination of Service. A five-consecutive-year Break
in Service shall be five consecutive one-year Breaks in Service.
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For purposes of determining whether a Break in Service has occurred,
if an Employee begins a maternity/paternity absence described in Section
411(a)(6)(E)(i) of the Code or a leave covered under the Family and Medical
Leave Act of 1993, the computation of his Hours of Service shall include the
Hours of Service that would have been credited if they had not been so absent
(or eight Hours of Service for each normal work day of such absence if the
actual Hours of Service cannot be determined). For purposes of this Section
11(b), a maternity/paternity absence means an absence from work (i) by reason of
the pregnancy of the Employee, (ii) by reason of the birth of a child of the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee, or (iv) for purposes
of caring for such child for a period beginning immediately following such birth
or placement. An Employee shall be credited for such Hours of Service (up to a
maximum of 501 Hours of Service) in the Plan Year in which such absence begins
(if such crediting will prevent him from incurring a Break in Service in such
Plan Year) or in the next following Plan Year.
In addition, if an Employee is eligible for and is granted leave
pursuant to the Company's family care leave plan, a Break in Service shall not
occur if the Employee returns to Service with an Employer, without any
intervening employment with another employer, immediately following the
expiration of such leave and remains employed for a period of 90 days
thereafter. The Employee shall be credited with the Hours of Service that would
have been credited if he had not been so absent (or eight Hours of Service for
each normal work day of such absence if the actual Hours of Service cannot be
determined) up to a maximum of 501 Hours of Service for each Plan Year during
the period of such absence (if such crediting will prevent him from incurring a
Break in Service for any such Plan Year).
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(c) Reemployment - If a former Employee is reemployed after a
one-year Break in Service, the following special rules shall apply in
determining his Years of Vesting Service:
(1) New Accounts may be established to reflect
his interest in the Plan attributable to
Service after the Break in Service.
(2) If he is reemployed after the occurrence of
a five-consecutive-year Break in Service,
Years of Vesting Service after the Break in
Service will not increase his vested
interest in his Accounts attributable to
Service prior to the Break in Service.
(3) After he completes one Year of Vesting
Service following reemployment, his Years of
Vesting Service will include his Years of
Vesting Service accumulated prior to the
Break in Service.
Section 12. When Capital Accumulation Will Be Distributed.
(a) Except as otherwise provided in Sections 12(c) and 13, a
Participant's Capital Accumulation will be distributed following his termination
of Service, but only at the time and in the manner determined by the Committee.
If the value of a Participant's Capital Accumulation at the time distribution
would otherwise commence under this Section 12 exceeds $5,000, no portion of his
Capital Accumulation may be distributed to him before he attains age 65 without
his written consent.
(b) In the event of a Participant's Retirement, Disability or death,
distribution of his Capital Accumulation shall occur during the Plan Year
following the Plan Year in which his Retirement, Disability or death occurs. If
a Participant's Service terminates for any other reason, distribution of his
Capital Accumulation shall occur during the Plan Year in which the third
anniversary of his termination of Service occurs (or, if earlier, during the
Plan Year following
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the Plan Year in which he would be eligible for Retirement (as a result of
attaining the requisite age and having previously completed the requisite number
of Years of Vesting Service), incurs a Disability or dies).
(c) Distribution of a Participant's Capital Accumulation shall
commence not later than 60 days after the Allocation Date coinciding with or
next following the latest of (l) the date of his 65th birthday, (2) the l0th
anniversary of the date he became a Participant, or (3) the date he terminates
Service. The distribution of the Capital Accumulation of any Participant who
attains age 70 1/2 in a calendar year and either has (1) terminated Service or
(2) is a "5% owner" (as defined in Section 416(i)(l)(B)(i) of the Code) must
occur not later than April 1st of the next calendar year and must be made in
accordance with the regulations under Section 401(a)(9) of the Code, including
Section 1.40l(a)(9)-2. Distributions shall be offered to any other Participant
who attains age 70 1/2 before January 1, 1999, to the extent required under
Sections 401(a)(9) and 41l(d)(6) of the Code and the regulations issued
thereunder. If the amount of a Participant's Capital Accumulation cannot be
determined (by the Committee) by the date on which a distribution is to occur,
or if the Participant cannot be located, distribution of his Capital
Accumulation shall commence within 60 days after the date on which his Capital
Accumulation can be determined or after the date on which the Committee locates
the Participant.
(d) If a Participant's Capital Accumulation is retained in the Trust
after his Service ends, his Accounts will continue to be treated as described in
Section 6. However, except as otherwise provided in Section 3(b), such Accounts
shall not be credited with any additional Employer Contributions and
Forfeitures. If the distribution of a Participant's Capital
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Accumulation does not occur during the Plan Year following the Plan Year in
which his Service terminates, his entire Capital Accumulation may be segregated
and invested in assets other than Stock (as determined by the Committee).
(e) Notwithstanding any other provision of this Plan, all or a
portion of a Participant's Capital Accumulation may be distributed at any time
to the Participant's former spouse or other alternate payee, even prior to the
Participant's "earliest retirement age" (as defined in Section 414(p) of the
Code), if such distribution is made pursuant to and in accordance with the terms
of a "qualified domestic relations order" ("QDRO"), including QDROs which were
received prior to January 1, 1999. Such distribution will occur in a single lump
sum in the manner described in Section 14(a) as soon as practicable following
the date that the Committee determines that the order constitutes a QDRO. If the
value of a Participant's Capital Accumulation exceeds $5,000 (at the time a
distribution to the Participant's former spouse or other alternate payee would
otherwise be available under this Section 12(e)), no portion of such Capital
Accumulation may be distributed to his former spouse or other alternate payee,
without the written consent of such former spouse or other alternate payee.
Section 13. In-Service Distributions.
(a) Cash Dividends - If so determined by the Board of Directors, any
cash dividends payable on Stock allocated to the Stock Accounts of Participants
may be paid currently (or within 90 days after the end of the Plan Year in which
the dividends are paid to the Trust) in cash by the Trustee to such Participants
(or their Beneficiaries) on a nondiscriminatory basis, or the Company may pay
such dividends directly to the Participants (or Beneficiaries). Such
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distribution (if any) of cash dividends may be limited to Participants who are
still Employees, may be limited to dividends on shares of Stock which are then
vested or may be applicable to cash dividends on all shares allocated to
Participants' Stock Accounts.
(b) Withdrawals - A Participant who has attained age 55 and
completed at least ten Years of Participation in the Plan shall be notified of
his right to elect to (1) withdraw in cash a portion of the balance in his Stock
Account attributable to shares of Stock acquired by the Trust after December 31,
1986, or (2) have a portion of his Stock Account transferred to the Profit
Sharing Plan, as provided in Section 401(a)(28)(B) of the Code. An election to
make a withdrawal or transfer must be made on the prescribed form and filed with
the Committee within the 90-day period immediately following the Allocation Date
of a Plan Year in the Election Period. For purposes of this Section 13(b),
"Years of Participation" includes only those Plan Years in which the Participant
is eligible to receive an allocation of Employer Contributions and Forfeitures
pursuant to Section 3(b), and the "Election Period" means the period of six
consecutive Plan Years beginning with the Plan Year in which the Participant
first becomes eligible to make a withdrawal or transfer.
For each of the first five Plan Years in the Election Period, the
Participant may elect to withdraw or transfer an amount which does not exceed
25% of the number of shares of Stock allocated to his Stock Account, less all
amounts previously withdrawn or transferred under this Section 13(b). In the
case of the sixth Plan Year in the Election Period, the Participant may elect to
withdraw or transfer an amount which does not exceed 50% of the number of shares
of Stock allocated to his Stock Account, less all amounts previously withdrawn
or transferred under this Section 13(b). No election shall be permitted if the
balance in a Participant's Stock
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Account as of the Allocation Date of the first Plan Year in the Election Period
has a Fair Market Value of $500 or less, unless and until the balance in his
Stock Account as of a subsequent Allocation Date in the Election Period exceeds
$500. Any withdrawal or transfer under this Section 13(b) shall be made within
90 days after the 90-day period in which the election may be made. A withdrawal
shall be treated as a distribution which is subject to the provisions of
Sections 14(c) and (e).
(c) Hardship Withdrawals -
(1) A Participant who is an Employee and who is not subject to
the provisions of Section 16 of the Securities Exchange Act of 1934, as amended,
may request a hardship withdrawal of a portion of his Capital Accumulation if he
needs funds for the following reasons:
(i) costs directly related to the purchase of a
principal residence for the
Participant (excluding mortgage payments);
(ii) reimbursement of tuition and
related educational fees,
including room and board and the
cost of textbooks, for
post-secondary education of the
Participant, his spouse, his
children or his dependents (as
defined in Section 152 of the
Code); or
(iii) payments necessary to prevent
the eviction of the Participant
from his principal residence or
foreclosure on the mortgage on
that residence.
(2) A withdrawal of less than $1,000 will not be permitted, and no
more than two withdrawals will be permitted in each Plan Year. The determination
of the amount of funds needed by the Participant may include any amounts
necessary to pay any Federal, state or local income taxes or penalties
reasonably anticipated to result from the withdrawal. The maximum
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aggregate amount that may be withdrawn under this Section 13(c) is the lesser of
(l) 40% of the Participant's Capital Accumulation or (2) $200,000 (less any
amount withdrawn under the Profit Sharing Plan). A withdrawal shall be disbursed
proportionately from the Participant's Stock Account and Nonstock Account and,
within the Participant's Stock Account, proportionately from shares of Stock
acquired by the Trust prior to January 1, 1987, and shares of Stock acquired by
the Trust after December 31, 1986. Any withdrawal under this Section 13(c) shall
be requested and effected in accordance with such rules and procedures as may be
established from time to time by the Committee.
Section 14. How Capital Accumulation Will Be Distributed.
(a) The Trustee will make distributions from the Trust only as
directed by the Committee. Distribution of a Participant's Capital Accumulation
will be made in a single lump sum in whole shares of Stock, cash or a
combination of both, as determined by the Committee; provided, however, that
(except as provided in Section 13(b)), the Committee shall notify the
Participant of his right to demand distribution of his Capital Accumulation
entirely in whole shares of Stock (with only the value of any fractional share
paid in cash).
(b) Distribution of a Participant's Capital Accumulation will be
made to the Participant if living, and if not, to his Beneficiary. In the event
of a Participant's death, his Beneficiary shall be his surviving spouse, or if
none, his estate. A Participant (with the written consent of his spouse, if any,
acknowledging the effect of the consent and witnessed by a notary public or Plan
representative) may designate a different Beneficiary (and contingent
Beneficiaries) from time to time by filing a written designation with the
Committee. A
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deceased Participant's entire Capital Accumulation shall be distributed to his
Beneficiary in a single lump sum as soon as practicable (but in no event later
than the December 3 1st of the calendar year that includes the fifth anniversary
of his death), whether or not such distribution has previously commenced.
(c) The Company shall furnish the recipient of a distribution with
the tax consequences explanation required by Section 402(f) of the Code and
shall comply with the withholding requirements of Section 3405 of the Code and
of any applicable state law with respect to distributions from the Trust (other
than any dividend distributions under Section 13(a)). If the Committee so elects
for a Plan Year, distributions to Participants may commence less than 30 days
after the notice required under Section 1.411(a)-11(c) of the regulations under
the Code is given; provided, however, that no such distribution to a Participant
shall be made unless (1) the Participant is informed that he has the right for a
period of at least 30 days after receiving the notice to consider whether or not
to consent to a distribution (or a particular distribution option), and (2) the
Participant affirmatively elects to receive a distribution after receiving the
notice.
(d) All shares of Stock distributed under the Plan will be readily
tradable on an established market; provided, however, that shares of Stock held
or distributed by the Plan may include such legend restrictions on
transferability as the Company may reasonably require in order to assure
compliance with applicable Federal and state securities laws. Except as
otherwise provided in this Section 14(d), no shares of Stock held or distributed
by the Trustee may be subject to a put, call or other option, or buy-sell or
similar arrangement. The provisions
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of this Section 14(d) shall continue to be applicable to Stock even if the Plan
ceases to be an employee stock ownership plan under Section 4975(e)(7) of the
Code.
(e) If a distribution of a Participant's Capital Accumulation is not
the minimum amount required to be distributed pursuant to the second and third
sentences of Section 12(c), the Committee shall notify the Participant (or any
spouse or former spouse who is his alternate payee under a "qualified domestic
relations order" (as defined in Section 414(p) of the Code)) of his right to
elect to have the "eligible rollover distribution" paid directly to an "eligible
retirement plan" (within the meaning of Section 401(a)(31) of the Code) that is
an individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, a
qualified trust described in Section 401(a) of the Code or a qualified annuity
plan described in Section 403(a) of the Code that accepts "eligible rollover
distributions." If such an "eligible rollover distribution" is to be made to the
Participant's surviving spouse, the Committee shall notify the surviving spouse
of his right to elect to have the distribution paid directly to an "eligible
retirement plan" that is either an individual retirement account described in
Section 408(a) of the Code or an individual retirement annuity described in
Section 408(b) of the Code. Any election under this Section 14(e) shall be made
and effected in accordance with such rules and procedures as may be established
from time to time by the Committee in order to comply with Section 401(a)(31) of
the Code.
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Section 15. No Assignment of Benefits.
A Participant's Capital Accumulation may not be anticipated,
assigned (either at law or in equity), alienated or subject to attachment,
garnishment, levy, execution or other legal or equitable process, except in
accordance with a "qualified domestic relations order" (as defined in Section
414(p) of the Code).
Section 16. Administration.
(a) Administrative Committee - The Plan will be administered by an
Administrative Committee composed of not fewer than three individuals appointed
by the Board of Directors to serve at its pleasure and without compensation. The
members of the Committee shall be the named fiduciaries with authority to
control and manage the operation and administration of the Plan. Members of the
Committee need not be Employees or Participants. Any Committee member may
resign by giving notice, in writing, to the Board of Directors.
(b) Committee Action - Committee action will be by vote of a
majority of the members at a meeting or in writing by all the members without a
meeting. A Committee member who is a Participant shall not vote on any question
relating specifically to himself.
The Committee shall choose from its members a Chairman and a
Secretary. The Chairman or the Secretary of the Committee shall be authorized to
execute any certificate or other written direction on behalf of the Committee.
The Secretary shall keep a record of the Committee's proceedings and of all
dates, records and documents pertaining to the administration of the Plan.
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(c) Powers and Duties of the Committee - The Committee shall have
all powers necessary to enable it to administer the Plan and the Trust Agreement
in accordance with their provisions, including without limitation the following:
(1) resolving all questions relating to the
eligibility of Employees to become
Participants;
(2) determining the appropriate allocations to
Participants' Accounts pursuant to Section
6;
(3) determining the amount of benefits payable
to a Participant (or Beneficiary), and the
time and manner in which such benefits are
to be paid;
(4) authorizing and directing all disbursements
of Trust Assets by the Trustee;
(5) establishing procedures in accordance with
Section 414(p) of the Code to determine the
qualified status of domestic relations
orders and to administer distributions under
such qualified orders;
(6) engaging any administrative, legal,
accounting, clerical or other services that
it may deem appropriate;
(7) construing and interpreting the Plan and the
Trust Agreement and adopting rules for
administration of the Plan that are
consistent with the terms of the Plan
documents and of ERISA and the Code;
(8) compiling and maintaining all records it
determines to be necessary, appropriate or
convenient in connection with the
administration of the Plan;
(9) reviewing the performance of the Trustee
with respect to the Trustee's administrative
duties, responsibilities and obligations
under the Plan and Trust Agreement; and
(10) executing agreements and other documents on behalf
of the Plan and Trust.
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The Committee shall be responsible for directing the Trustee as to
the investment of Trust Assets. The Committee may delegate to the Trustee the
responsibility for investing Trust Assets other than Stock. The Committee shall
establish a funding policy and method for directing the Trustee to acquire Stock
(and for otherwise investing the Trust Assets) in a manner that is consistent
with the objectives of the Plan and the requirements of ERISA.
The Committee shall perform its duties under the Plan and the Trust
Agreement solely in the interests of the Participants (and their Beneficiaries).
Any discretion granted to the Committee under any of the provisions of the Plan
or the Trust Agreement shall be exercised only in accordance with rules and
policies established by the Committee which shall be applicable on a
nondiscriminatory basis. The Committee shall have the full and exclusive
discretion to interpret and administer the Plan. All actions, interpretations
and decisions of the Committee are conclusive and binding on all persons, and
shall be given the maximum possible deference allowed by law.
(d) Expenses - All reasonable expenses of administering the Plan and
Trust shall be charged to and paid out of the Trust Assets. The Company may,
however, pay all or any portion of such expenses directly, and payment of
expenses by the Company shall not be deemed to be Employer Contributions.
(e) Information to be Submitted to the Committee - To enable the
Committee to perform its functions, the Company shall supply full and timely
information to the Committee on all matters as the Committee may require, and
shall maintain such other records as the Committee may determine are necessary
or appropriate in order to determine the benefits due or which may become due to
Participants (or Beneficiaries) under the Plan.
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(f) Delegation of Fiduciary Responsibility - The Committee from time
to time may allocate to one or more of its members and/or may delegate to any
other persons or organizations any of its rights, powers, duties and
responsibilities with respect to the operation and administration of the Plan
that are permitted to be so delegated under ERISA; provided, however, that
responsibility for investment of the Trust Assets may not be allocated or
delegated other than as provided in Section 16(c). Any such allocation or
delegation shall be made in writing, shall be reviewed periodically by the
Committee and shall be terminable upon such notice as the Committee in its
discretion deems reasonable and proper under the circumstances.
(g) Bonding, Insurance and Indemnity - To the extent required under
Section 412 of ERISA, the Company shall secure fidelity bonding for the
fiduciaries of the Plan.
The Company (in its discretion) or the Trustee (as directed by the
Committee) may obtain a policy or policies of insurance for the Committee (and
other fiduciaries of the Plan) to cover liability or loss occurring by reason of
the act or omission of a fiduciary. If such insurance is purchased with Trust
Assets, the policy must permit recourse by the insurer against the fiduciary in
the case of a breach of a fiduciary obligation by such fiduciary. The Company
hereby agrees, to the maximum extent permitted by law, to indemnify and hold
harmless the Committee and each of its designees under Section 16(f), who is an
officer, director or employee of any Employer, against any and all claims, loss,
damages, liability, expenses, including legal fees, costs, judgments, fines,
settlements and other amounts actually and reasonably incurred, including in
connection with any proceeding, arising by reason of the fact that such person
is or was acting in such capacity.
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(h) Notices, Statements and Reports - The Company shall be the "Plan
Administrator" (as defined in Section 3(16)(A) of ERISA and Section 414(g) of
the Code) for purposes of the reporting and disclosure requirements of ERISA and
the Code. The Committee shall assist the Company, as requested, in complying
with such reporting and disclosure requirements. The Company shall be the
designated agent of the Plan for the service of legal process.
Section 17. Claims Procedure.
A Participant (or Beneficiary) who does not receive a distribution
of benefits to which he believes he is entitled may present a claim to the
Committee. The claim for benefits must be in writing and addressed to the
Committee or to the Company. If the claim for benefits is denied, the Committee
shall notify the Participant (or Beneficiary) in writing within 90 days after
the Committee initially received the benefit claim. If there are special
circumstances which require an extension of time for processing the claim for
benefits, the Committee's decision shall be rendered not later than 180 days
after receipt of a claim. Any notice of a denial of benefits shall advise the
Participant (or Beneficiary) of the basis for the denial, any additional
material or information necessary for the Participant (or Beneficiary) to
perfect his claim and the steps which the Participant (or Beneficiary)
must take to have his claim for benefits reviewed.
Each Participant (or Beneficiary) whose claim for benefits has been
denied may file a written request for a review of his claim by the Committee.
The request for review must be filed by the Participant (or Beneficiary) within
60 days after he receives the written notice denying his claim. The decision of
the Committee will be made within 60 days after receipt of a
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request for review and shall be communicated in writing to the claimant. Such
written notice shall set forth the basis for the Committee's decision. If there
are special circumstances (such as the need to hold a hearing) which require an
extension of time for completing the review, the Committee's decision shall be
rendered not later than 120 days after receipt of a request for review. All
decisions and interpretations of the Committee under this Section 17 shall be
conclusive and binding upon all persons with an interest in the Plan and shall
be given the greatest deference permitted by law.
Section 18. Limitation on Participants' Rights.
A Participant's Capital Accumulation will be based solely upon his
vested interest in his Accounts and will be paid only from the Trust Assets. An
Employer, the Committee or the Trustee shall not have any duty or liability to
furnish the Trust with any funds, securities or other assets, except as
expressly provided in the Plan.
The adoption and maintenance of the Plan shall not be deemed to
constitute a contract of employment or otherwise between an Employer and any
Employee, or to be a consideration for, or an inducement or condition of, any
employment. Nothing contained in this Plan shall be deemed to give an Employee
the right to be retained in the Service of an Employer or to interfere with the
right of an Employer to discharge, with or without cause, any Employee at any
time.
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Section 19. Future of the Plan.
The Company reserves the right to amend or terminate the Plan (in
whole or in part) and the Trust Agreement at any time, by action of the Board of
Directors. Neither amendment nor termination of the Plan shall retroactively
reduce the vested rights of Participants or permit any part of the Trust Assets
to be diverted to or used for any purpose other than for the exclusive benefit
of the Participants (and their Beneficiaries).
The Company specifically reserves the right to amend the Plan and
the Trust Agreement retroactively in order to satisfy any applicable
requirements of the Code and ERISA.
If the Plan is terminated (or partially terminated), participation
of Participants affected by the termination will end. If Employer Contributions
are not replaced by contributions to a comparable plan which satisfies the
requirements of Section 401(a) of the Code, the Accounts of only those
Participants who are Employees on the effective date of termination will become
nonforfeitable as of that date. A complete discontinuance of Employer
Contributions shall be deemed to be a termination of the Plan for this purpose.
The Capital Accumulation of those Participants whose Service terminated prior to
the effective date of Plan termination will continue to be determined pursuant
to Section 10(a); and, to the extent that such Participants are not vested, the
nonvested balances in their Accounts will become Forfeitures to be reallocated
as of the effective date of Plan termination (even if they have not incurred a
five-consecutive-year Break in Service).
After termination of the Plan, the Trust will be maintained until
the Capital Accumulations of all Participants have been distributed. Capital
Accumulations may be
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distributed following termination of the Plan or
distributions may be deferred as provided in Section 12, as the Company shall
determine.
In the event of the merger or consolidation of this Plan with
another plan, or the transfer of Trust Assets (or liabilities) to another plan,
the Account balances of each Participant immediately after such merger,
consolidation or transfer must be at least as great as immediately before such
merger, consolidation or transfer (as if the Plan had then terminated).
Section 20. "Top-Heavy" Contingency Provisions.
(a) The provisions of this Section 20 are included in the Plan
pursuant to Section 401(a)(10)(B)(ii) of the Code and shall become applicable
only if the Plan becomes a "top-heavy plan" under Section 416(g) of the Code for
any Plan Year.
(b) The determination as to whether the Plan becomes "top-heavy" for
any Plan Year shall be made as of the Allocation Date of the immediately
preceding Plan Year by considering the Plan together with the Profit Sharing
Plan and any other tax-qualified plan maintained by an Affiliate in which a "key
employee" participates. The Plan and the Profit Sharing Plan (and any other plan
required to be aggregated with the Plan) shall be "top-heavy" only if the total
of the account balances under the Plan and the Profit Sharing Plan and such
other plan for "key employees" as of the determination date exceeds 60% of the
total of the account balances for all Participants. For such purpose, account
balances shall be computed and adjusted pursuant to Section 416(g) of the Code.
"Key employees" shall be certain Participants (who are officers or shareholders
of the Company) and Beneficiaries described in Section 416(i)(1) or (5) of the
Code.
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(c) For any Plan Year in which the Plan is "top-heavy," each
Participant who is an Employee on the Allocation Date (and who is not a "key
employee") shall receive a minimum allocation of Employer Contributions and
Forfeitures which is equal to the lesser of:
(1) 3% of his Statutory Compensation; or
(2) the same percentage of his Statutory
Compensation as the allocation to the "key
employee" for whom the percentage is the
highest for that Plan Year. 401(k)
Contributions under the Profit Sharing Plan
made by key employees during a Plan Year
shall be included in determining the "key
employee" with the highest percentage for
such Plan Year.
For this purpose, Statutory Compensation of each Employee shall not take into
account any amount in excess of $160,000 (as adjusted periodically after 1998
for increases in the cost of living).
(d) As of the first day of any Plan Year in which the Plan has
become "top-heavy," the applicable vesting schedule in Section 10(a)(2) shall be
amended (with respect to any Employee who is credited with at least one Hour of
Service after the Plan has become "top-heavy") to provide for vesting upon
completion of at least three Years of Vesting Service; provided, however, that
such vesting schedule described in this Section 20(d) is more favorable than the
applicable schedule described in Section 10(a)(2) with respect to such affected
Employee.
If the Plan ceases to be "top-heavy," the Capital Accumulation of a
Participant who, at that time, has less than three years of Service shall
thereafter be determined under the applicable vesting schedule in Section
10(a)(2), instead of the vesting schedule in this Section 20(d), except that his
nonforfeitable percentage shall not be reduced below the nonforfeitable
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percentage that he had at the time the Plan ceased to be "top-heavy." If the
Plan ceases to be "top-heavy," the Capital Accumulation of a Participant who, at
that time, has three or more years of Service shall continue to be determined
under the vesting schedule in this Section 20(d).
Section 21. Governing Law.
The provisions of this Plan and the Trust Agreement shall be
construed, administered and enforced in accordance with the laws of the State of
California, to the extent such laws are not superseded by ERISA.
Section 22. Execution.
To record this amendment and restatement of the Plan, the Company
has caused this document to be executed on this _____ day of________________ 199
.
GRANITE CONSTRUCTION INCORPORATED
By:
------------------------------------------
Its: David H. Watts, President & CEO
By:
------------------------------------------
Its: Michael Futch, Secretary